What Will Microsoft Do If Yahoo Whiffs Its Q1?

Kara Swisher raises a good question: What will Microsoft (MSFT) do if Yahoo (YHOO) reports rotten Q1 results? And there is reason to be worried. Thanks to MSFT’s pending $31-a-share bid, YHOO shares have largely been sheltered from the ugly slide suffered by Google (GOOG) shares in recent weeks. In fact, since Microsoft made its offer, Google has dropped 21% - at least part of that concern about a weakening online ad environment. Had that happened to YHOO - and if MSFT had not come along - Yahoo shares could now be at $15 and change. Remember that Yahoo is operating in the same softening advertising environment as Google - and in fact, its results could also be hurt by customer confusion about the potential impact from the takeover bid.

Henry Blodget today lays out a scenario where Yahoo reports a stinker, Microsoft pulls its offer, the stock drops 40%, and then MSFT comes back with a new offer - at $25.

If you want to see what can happen when shareholders protest too much, take a look at Cablevision (CVC), where holders last year rejected a $36.26 a share bid from the Dolan family to take the company private. Investors asserted that the offer was too low. And then the cable sector hit an air pocket. Current CVC price: $23.27.

Maybe Jerry Yang should simply call Steve Ballmer and take his money while he can.

Yahoo today is down 12.5 cents, at $28.875. (Or as we used to say in the pre-decimal days, down 1/8 at 28 7/8.)

Comments

[steveballmer]

YAHOO! $$$ YAHOO!
I guess you people have heard the news by now that I am buying Yahoo! All of my denials over the past year were not lies they were strategic postulations! In other words, I knew that the politicians would be talking a recession into existence one year before the general election which would drive the stock price down, when it hit the low yesterday, I made my move!
$44,600,000,000 for Yahoo is a steal!
Any large integration process with Yahoo has risks associated with it, I know we've all thought about it. We could have hired more engineers, but the market continues to grow and the leader (Gaggle) continues to consolidate position. There's nothing like the chance to put together two large engineering organizations. A good integration actually should be quite an accelerant to progress.
In other words Google, be afraid! Be very afraid! Muahahahahahaha

BallmerSoft Begins!
It's great to be CEO!

[WAKEUP]

Somebody has to say it: The "steveballmer&quo... post of Mar 12 11:32 PM was done by an infantile individual, who has nothing better to do than sit around and play with his infantilism.